Key Takeaways
- • BC European Capital VIII, BC Partners' 2005 flagship fund, posted a 4.38% IRR and 1.2x TVPI as of mid-2020 and ranked in the 3rd quartile on IRR and 4th quartile on multiple per Cambridge Associates' benchmark.
- • BC European Capital IX (2011 vintage) returned a 13.10% IRR and 1.6x multiple as of June 30, 2020, yet still ranked 3rd quartile on both IRR and multiple against Cambridge Associates' benchmark.
- • StepStone Group reported BC European Capital IX outperformed its public market equivalent by only 0.2% as of March 31, 2020, meaning investors could have fared nearly as well in public equities.
- • BC European Capital X (2017 vintage), not fully invested as of mid-2020, posted a 1.0x multiple and 0.30% IRR, ranking 2nd quartile on Cambridge Associates' benchmark but 4th quartile per PitchBook.
- • Intelsat, a 2008 BC Partners and Silver Lake buyout valued at $16.8 billion, filed for bankruptcy in May 2020, wiping out BC Partners' stake and prompting shareholder lawsuits naming chairman Raymond Svider and partner Justin Bateman.
Summary
A review of BC Partners' recent flagship funds shows performance trailing peers, according to the article's analysis of third-party data. The piece follows a period of heavy media attention on the firm, including a failed $4.6 billion refinancing of PetSmart in October 2020 after lenders balked, and an ongoing hostile takeover bid for G4S by portfolio company GardaWorld, which was raised by 23% in late November and early December 2020.
BC European Capital VIII, the firm's 2005 flagship, generated a 4.38% annualized IRR and 1.2x TVPI as of mid-2020, based on a Washington State Investment Board report. Cambridge Associates ranked the fund in the 3rd quartile on IRR and 4th quartile on multiple, and PitchBook placed it in the 4th quartile. The article links the fund's weakness in part to Intelsat, which filed for bankruptcy in May 2020.
BC European Capital IX, a 2011-vintage fund, performed better, with a 13.10% IRR and 1.6x multiple as of June 30, 2020. It still ranked in the 3rd quartile on both measures against Cambridge Associates' benchmark. StepStone Group reported that as of March 31, 2020, the fund's performance exceeded its public market equivalent by only 0.2%.
BC European Capital X, the 2017-vintage successor, was not fully invested as of mid-2020. It showed a 1.0x multiple and 0.30% IRR as of March 30, ranking 2nd quartile on Cambridge Associates' benchmark and 4th quartile per PitchBook.
The Intelsat investment illustrates the pressures on these funds. BC Partners and Silver Lake acquired Intelsat in 2008 in a $16.8 billion leveraged buyout financed with $15.3 billion of debt and $1.5 billion of equity. Chairman Raymond Svider and partner Justin Bateman have sat on Intelsat's board since 2008. According to Bloomberg data, revenue growth slowed and sales later declined. The 2013 IPO priced below its range, and the firms collected roughly $200 million in fees from Intelsat before it. Intelsat's bonds and shares fell in November 2019 after the FCC rejected its private spectrum sale in favor of a public auction. Following the bankruptcy filing, shareholders have sued BC Partners and Silver Lake over share sales in late 2019, with BC Partners reportedly selling nearly 6 million shares in the fourth quarter of 2019. Svider and Bateman are named as defendants.
BC European Capital VIII, the firm's 2005 flagship, generated a 4.38% annualized IRR and 1.2x TVPI as of mid-2020, based on a Washington State Investment Board report. Cambridge Associates ranked the fund in the 3rd quartile on IRR and 4th quartile on multiple, and PitchBook placed it in the 4th quartile. The article links the fund's weakness in part to Intelsat, which filed for bankruptcy in May 2020.
BC European Capital IX, a 2011-vintage fund, performed better, with a 13.10% IRR and 1.6x multiple as of June 30, 2020. It still ranked in the 3rd quartile on both measures against Cambridge Associates' benchmark. StepStone Group reported that as of March 31, 2020, the fund's performance exceeded its public market equivalent by only 0.2%.
BC European Capital X, the 2017-vintage successor, was not fully invested as of mid-2020. It showed a 1.0x multiple and 0.30% IRR as of March 30, ranking 2nd quartile on Cambridge Associates' benchmark and 4th quartile per PitchBook.
The Intelsat investment illustrates the pressures on these funds. BC Partners and Silver Lake acquired Intelsat in 2008 in a $16.8 billion leveraged buyout financed with $15.3 billion of debt and $1.5 billion of equity. Chairman Raymond Svider and partner Justin Bateman have sat on Intelsat's board since 2008. According to Bloomberg data, revenue growth slowed and sales later declined. The 2013 IPO priced below its range, and the firms collected roughly $200 million in fees from Intelsat before it. Intelsat's bonds and shares fell in November 2019 after the FCC rejected its private spectrum sale in favor of a public auction. Following the bankruptcy filing, shareholders have sued BC Partners and Silver Lake over share sales in late 2019, with BC Partners reportedly selling nearly 6 million shares in the fourth quarter of 2019. Svider and Bateman are named as defendants.
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